UNCTAD estimates $1bln in export gains for Pakistan
KARACHI: US-China’s trade tiff is expected to pave way for Pakistan to have export gains of around one billion dollars, the United Nations said, indicating a good omen for the economy struggling to increase foreign inflows.
United Nations Conference on Trade and Development (UNCTAD) said Pakistan would have export gains of 3.8 percent of its total exports as a consequence of Chinese tariffs on US. The country’s total exports amounted to $23.212 billion in the last fiscal year of 2017/18, up 14 percent over the preceding fiscal year.
A new study by UNCTAD looks at the repercussions of existing tariff hikes by the United States and China, and the effects of the increase scheduled for 1 March.
“Substantial effects relative to the size of their exports are also expected for Australia, Brazil, India, Philippines, Pakistan and Viet Nam,” Geneva-based UNCTAD, the part of the United Nations secretariat, said in the latest study.
Around $250 billion in Chinese exports will be subject to US tariffs, while approximately $110 billion in US exports will be subject to China’s tariffs.
Pakistan will be among the countries that could benefit from Chinese tariffs on the US. The largest beneficiary of the trade war would be European Union in export gains, followed by Mexico, Japan, Canada, Korea, India, Australia, Brazil, Taiwan, Viet Nam, Singapore and others.
“Countries that are expected to benefit the most from US-China tensions are those which are more competitive and have the economic capacity to replace US and Chinese firms,” the intergovernmental body said.
“European Union exports are those likely to increase the most, capturing about $70 billion of US-China bilateral trade ($50 billion of Chinese exports to the US, and $20 billion of US exports to China). Japan, Mexico and Canada will each capture more than $20 billion.”
China’s tariffs on US exports will give benefits mostly to non-Chinese firms and the same will be case vis-à-vis US tariffs on China’s exports.
“The reason is simple: bilateral tariffs alter global competitiveness to the advantage of firms operating in countries not directly affected by them,” the UNCTAD said. “This will be reflected in import and export patterns around the globe.”
China is the third biggest export destination for Pakistan after the US and UK, accounting for seven percent share in the country’s total exports to the world. But, China is the biggest import source for Pakistan with nearly 24 percent share in the country’s total imports of $60 billion.
China-Pakistan’s bilateral free trade agreement largely remains in benefit of the former with the latter facing trade deficit of almost $10 billion.